June 5, 2009 / 6:35 AM / 9 years ago

UPDATE 2-Dubai's ENOC eyes "modest premium" for Dragon Oil

* ENOC confirms behind Dragon Oil bid approach

* Considers only “modest premium”

* Dragon shares fall 7 pct

(Adds share drop, analyst)

By Tom Bergin

LONDON, June 5 (Reuters) - Dubai state-owned Emirates National Oil Company (ENOC) said it only planned to pay a “modest premium” to secure control of London-listed Dragon Oil DGO.L, knocking Dragon’s shares and prompting accusations of opportunism.

Dragon, in which ENOC already owns 52 percent, according to Reuters data, said on Thursday it had received a takeover approach from an unnamed party. [ID:nL41021681]

ENOC said on Friday it was behind the approach.

“It (ENOC) is currently considering an offer price that would represent a modest premium to Dragon Oil plc’s closing share price as of 3 June 2009,” ENOC said in a statement.

Dragon’s London-listed shares closed at 3.38 pounds on June 3, suggesting the Dubai state company was planning to pay $1.1-1.5 billion to buy out its minority partners.

The shares, which jumped 20 percent on its statement about the bid approach, fell 7.39 percent to trade at 373 pence at 1123 GMT.

“It sounds like an opportunistic bid from an insider,” one hedge fund manager said, adding a “fair price” for Dragon’s London-listed shares would be 7-8 pounds, although he expected a bid to come in the 5-6 pounds region.

A rival bid is seen as unlikely, given ENOC’s 52 percent stake but analysts said a small premium to the Wednesday close would undervalue Dragon.

“We believe any offer should reflect our total net asset value valuation of 516p per share as a base case,” Gerry Hennigan, oil analyst at Goodbody, said.

Dragon’s main assets are oil and gas fields in Turkmenistan, which has become a focus for international oil companies in recent years after a change in leadership led to a more open approach toward foreign investment.

The bid talk follows a statement earlier this week from UK-based Heritage Oil HOIL.L that it was in merger talks with an unnamed party which sources familiar with the matter told Reuters was Turkey’s Genel Enerji. [ID:nN04241656] (Additional reporting by Paul Hoskins; Editing by Hans Peters and Jon Loades-Carter)

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